AT&T <i>Optimas Award</i> Winner for General Excellence, 1994

Corey Anthony is in a very good mood. With a thick Texas drawl, the senior vice president of human resources at AT&T Inc. boasts of spending the past 15 years working for one great company.

No matter that it’s 102 degrees outside his executive suite in Dallas, where the company moved its headquarters two years ago, or that during his tenure he has witnessed massive layoffs, several corporate relocations and revolutionary changes in the telecommunications industry. Thinking back to what HR looked like when he joined the company shortly after AT&T won the 1994 Optimas Award for General Excellence, Anthony says the amazing thing is how little the strategies for managing people have changed.

AT&T was honored with the Optimas Award for bringing HR leaders from the trenches of functional management into positions of greater authority and for developing a world-class people management system. The leadership understood the need for HR professionals to be strategic thinkers and true business partners and realized the critical value of HR in anticipating, planning and responding to change.

“We’re approaching a time here, very soon my guess is, when we will face as much change or even greater change than we faced at the breakup of the Bell system in 1984,” Harold W. Burlingame, AT&T’s former senior vice president of HR, said in 1994. “And so we must constantly think about how that will happen and when that will happen and what’s required to get ready for that.”

Burlingame was truly prescient. Since then, the world’s largest telecommunications company has faced unprecedented changes and competition in both the global marketplace and workplace. “AT&T should, in fact, be viewed as a very large, highly successful, 5-year-old company,” says veteran telecom and technology analyst Jeff Kagan. “It’s growing and changing so fast it’s probably still trying to figure out what works and what doesn’t across the board, including how it manages people. The telecom industry changes every five to seven years now. That is why everyone is confused—customers, investors and employees.”

For AT&T, the biggest transformation came in 2005, when it was acquired by SBC Communications Inc. Sixteen years ago when it won the Optimas Award, AT&T employed 53,000 people. Today, after the merger with SBC, the workforce totals 276,000. It is ranked seventh on the Fortune 500 by revenue and is now the 11th largest employer in the world. In today’s wireless world, AT&T sells wildly popular products like iPhones and services such as cloud computing that were unimaginable in the early 1990s. It hosts 38 Internet data centers throughout the world, has a presence in 220 countries, and with 87 million customers in the U.S. alone, estimates that nearly half of the wireless data traffic in the U.S. runs on its network.

Manager mind-setWhen he led the HR operation back in 1994, Burlingame set out to change the mentality of his managers. He instituted symposiums and brought in academic and corporate executives to train HR leaders to be accountable for results. He recalls working with one Ph.D., a manager who was brilliant in software but had no clue about business markets. Burlingame brought in a financial expert from a university to be the manager’s financial tutor. “The employee was taught to be a full participant at the table in business,” Burlingame says. “Not necessarily to have expertise in everything like pensions, but to understand the business strategy and requirements of the organization.”

“We have at the senior leadership table a very different team than we have ever had in the past,” Burlingame said in 1994. “My goal has always been to get human resources leaders at the central business tables of AT&T in every part of the business.” And he did. In the 1990s, Burlingame reported directly to the CEO. Every operating unit of the company had a president who reported directly to Burlingame, and was responsible for the business results of the individual unit. Anthony says HR executives have played major roles in decision making at AT&T ever since. His boss, Bill Blasé, senior executive vice president for HR, reports directly to CEO Randall Stephenson. Anthony himself deals directly with the CEO on matters such as identifying talent and succession planning.

Burlingame left AT&T in 2001 but served as an advisor to the company until 2005. Currently, he is on several corporate and academic boards, including serving as chairman of ORC Worldwide, a global compensation and HR consulting data service business. He is also a member of the national advisory board of the John J. Heldrich Center for Workforce Development at Rutgers University. In 2004, he was named a distinguished fellow of the National Academy of Human Resources.

Based on recent experiences, Burlingame believes that many companies today pay only lip service to HR’s executive authority. “I can’t speak about AT&T now, but I can say that in many companies there aren’t votes from HR on issues affecting people,” he says. “Often financial issues override HR issues. Companies have made cuts and changes in pension and health benefits across the board.”

Training concerns Burlingame especially worries about the cutbacks in spending for training and development at AT&T and other companies. Like other new executives for decades before him, Burlingame recalls being brought from a regional office to the company’s storied corporate headquarters in New York in the 1980s for training and orientation. The experience offered a unique opportunity, he says, for new people to become thoroughly acquainted with all facets of the company and its culture.

“I feel for what HR is going through now,” Burlingame says. “Everything is being maximized to make quarterly results. In my day, we invested very heavily in training and developing front-end supervisors so that they could work effectively with their people. Now there isn’t the same kind of investment in people.”

In 1994, AT&T spent $500 million a year on education and training. Today, it says, it spends $244 million a year—less than half as much but with more than five times the number of employees. That is largely due to new technology that has allowed the company to dramatically slash its training and development budgets, Anthony says. About 40 percent of AT&T’s training is through e-learning. In the paper world of 1994, when content wasn’t easily shared and people met face to face, training and development costs were far higher.

Anthony points to the new AT&T University in Dallas, which he calls “the crown jewel” of the business. AT&T opened the doors of its new U in 2008, with satellite schools across the country and throughout the world. “It started with senior executives, and we’ve expanded it to frontline managers. We train 80,000 to 90,000 managers a year,” Anthony says. Managers participate in Virtual Summit sessions using a technology platform that allows thousands of managers to simultaneously learn from AT&T university instructors in subjects ranging from technological in- novation to leveraging the new AT&T brand.

He also cites the company’s Technical Career Path program for innovation in specifically targeting technical talent, providing a framework for progression and promotion and facilitating movement of talent between business departments.

Anthony can’t provide specific numbers on the effect of HR today on the bottom line. But in a statement, AT&T says, “Charged with the development and implementation of policies and practices, as well as managing the relationship with the unions that represent hourly employees, the HR team is a key part of AT&T’s laser focus on keeping expenses in check. HR has led the way in containing health care costs—one of the chairman’s top priorities for 2009 and a major challenge at AT&T, which provides benefits to about 1.2 million active employees, retirees and their dependents.”

Like Burlingame, Anthony, who was formerly the vice president of labor relations, works closely with the company’s unions. He says the relationship is very productive today, in part, because the unions have a much better understanding of the competitive pressures companies are up against. “I applaud unions for understanding that.”

Burlingame realizes that AT&T and talent management issues will continue to evolve. But the fundamentals of HR should never change dramatically, he says. “HR has the capacity to unlock talents and skills that you never knew existed, and to do enormous good. What you have to do is give people positive values. That is just as important today as it was in 1994.”